ICU MEDICAL INC/DE

Current report

We derive a significant portion of our revenues from non-U.S. sales and from products manufactured at our non-U.S. facilities which are then imported to the U.S. We are therefore subject to risks of doing business in other countries, including those related to tariffs, retaliatory counter measures and further escalation of trade tensions.

Current report

The imposition of tariffs by the U.S. government and retaliatory tariffs imposed by other foreign governments is expected increase our costs. Where possible, we may address increasing supply chain costs in pricing; however, we operate to a large extent under long-term contracts whereby pricing is fixed for a set period of time. The tariffs as currently implemented are likely to have a material impact on our business, financial condition and results of operations; however, the extent to which the imposition of tariffs, possible delays and exemptions remains fluid.

Current report

Additionally, the imposition of higher tariffs could undermine the competitiveness of a U.S. based company in the global market and could result in termination of orders by customers, lower demand for products and the loss of market share.

Current report

A meaningful portion of our global revenues is from products manufactured in our Costa Rica and Mexico manufacturing facilities which are then imported into the U.S. We expect revenues from goods manufactured in Costa Rica and Mexico and imported to the U.S. to remain a significant portion of our revenues for the foreseeable future.

Current report

In January of 2025, the current presidential administration first issued executive orders imposing tariffs on imported goods from Mexico, and China. Tariffs initially imposed were 25% on certain goods from Mexico and 10% on all goods from China. Currently the majority of products manufactured in our Mexico facilities are exempted from tariffs under the United States-Mexico-Canada Agreement ("USMCA"). If the USMCA exemptions were eliminated in the future, our tariff expense for products manufactured in Mexico would increase substantially. On April 2, 2025, the U.S. further announced a 10% baseline reciprocal tariff on imports from all countries, plus an additional country-specific tariff on imports from select trading partners. On April 9, 2025, the U.S. implemented a 90-day pause on the country-specific tariffs for all countries except China, while maintaining the 10% baseline tariff.

Current report

These actions have resulted, and are expected to further result, in retaliatory measures on U.S. goods by other foreign governments. If maintained, these recently announced tariffs, and the potential escalation of trade disputes could pose a risk to our business that could further affect our financial condition or results of operations and/or cash flows, as well as, our long-term investment strategies. The extent and duration of the tariffs and the resulting impact on general economic conditions and on our business are uncertain and are expected to be impacted by various factors, such as negotiations between U.S. and affected countries, the responses of other countries or regions, exemptions or exclusions that already exist or may be granted, availability and cost of alternative sources of our products and materials, and our ability to offset the effects of any tariffs that might be imposed.

Current report

(b) None.

Previous report

(a) We are reporting the following information in lieu of reporting on a Current Report on Form 8-K under Item 1.01 Entry into a Material Definitive Agreement.

Previous report

On November 12, 2024, the Company and ICU Medical Sales, Inc., a Delaware corporation (collectively, the "ICU Medical Entities") entered into a purchase agreement (the "Agreement") with Otsuka Pharmaceutical Factory America, Inc., a Delaware corporation ("OPF"). Pursuant to the Agreement, prior to closing, the ICU Medical Entities will form a Delaware limited liability company (the "LLC") and the ICU Medical Entities and the LLC shall enter into a contribution agreement under which the ICU Medical Entities shall transfer the assets, liabilities and operations that comprise the IV Solutions product line to the LLC.

Previous report

At the closing, OPF will acquire a 60% equity interest in the LLC from the ICU Medical Entities. Pursuant to the Agreement, the consideration receivable by the ICU Medical Entities is comprised of (a) estimated cash consideration of approximately $200 million at closing and (b) a milestone payment paid by OPF to the Company for any incremental revenue and incremental gross profit recognized by the LLC, as calculated under the terms of the Agreement upon the final determination of the LLC's audited financial statements for the year-ending and as of December 31, 2026.

Previous report

The Agreement contains customary representations, warranties, and covenants of each of the ICU Medical Entities and OPF. The Agreement further provides that, subject to certain limitations, the ICU Medical Entities and OPF will each indemnify the other for certain losses arising from such breaches of representations, warranties, and covenants and liabilities allocated to such party pursuant to the terms of the Agreement. Additionally, at closing, the LLC, ICU Medical Entities and OPF will enter into an operating agreement, and the LLC and the Company will enter into one or more commercial agreements, a services agreement and a license agreement, which will provide for, among other things, certain administrative, marketing, distribution, sales support and logistic services to the LLC for a specified period of time.

Previous report

We believe that OPF’s scale, experience with U.S. partnerships, and demonstrated long-term commitments will help bring supply chain resiliency and innovation to the North American IV solutions market.

Previous report

The foregoing summary of the Agreement is not complete and is qualified in its entirety by reference to the Agreement, a copy of which is attached hereto as Exhibit 2.3 and incorporated herein by reference.